Since the pandemic in 2020, at least one million have migrated back to their hometowns, especially the fresh graduates who consider jobs in the cities unstable. Agriculture is among the top choices people migrate back to do. Workers in the sector account for 40% of the Thai population but the sector produces only 10% of the country’s GDP. What Thai society deems ‘backbone’ of the country, toil endlessly in the world where farmers in other countries work less but produce more.
In the second episode of the Lessons from Crisis Clubhouse Series, Thailand Policy Lab together with Thailand Future Foundation, invited stakeholders from every sector, private and public, to exchange ideas and find solutions together regarding ‘Local Economy.’
In this episode, we invited representatives from three organizations: Dr. Srilaporn Buasai, President of Regional and Provincial Development 4.0 under Social Strategic Plan, Pongsak Yingchoncharoen, President of National Municipal League of Thailand and Mayor of Yala, Aukrit Unahalekhaka, co-founder of Ricult, an agricultural start-up. The three conversed about challenges they all face about the local economy in terms of agriculture and exchanged their ideas to improve the sector.
This is what we have learned from the two-hour conversation.
Thai agriculture is not ruined by Covid-19, but inequality
Dr Srilaporn inspired the conversation by asking everyone to think about the meaning of “local economy.” Such an economy lies upon the most substantial foundation that is agriculture, the source of other resources and culture. The Covid-19 pandemic does not affect the resources much since it results in recovery of nature but supply chain management, logistics, and reduced consumption creates oversupply, affecting the agricultural sector while the export number is still doing relatively well.
One of the challenges in the Thai agricultural sector stems from the lack of entrepreneur farmers in the market where opportunities are all around, the need for processed products, direct selling to customers, to name but a few. To do that, farmers need skill and access to the internet and technology.
Dr. Srilaporn mentioned a farmer in Nakhon Si Thammarat who grows Siam Pomelos on an 80-rai piece of land. The farmer grows twenty-five pomelo trees on one rai, a tree produces around 200 fruits at the price of 300 baht per one. The farm gains around ten million baht each year. Still, the son of the farmer chose to be an engineer with 30,000 baht per month income. Now the conditions in the city compel the younger generations to go back home and might see the agricultural sector as a golden chance.
Pongsak, who has been a mayor for eighteen years, told us that the south is among the poorest if we exclude the tourism income which has concealed this fact. If the south is able to improve their agriculture, people’s incomes will increase, there will be more cash flows. He mentioned that Yala is advantageous because of their rich soil, they can sell a tangerine for thirty baht. Pongsak categorized plants in Yala into the following:
- Rubber trees, which are dead products
- Durians, an alternative industrial crop. They are in high demand and some varieties such as Mu Sang King that is more profitable than Monthong
- Longkong, which can be turned into premium products
- Coffee beans that Yala has been growing for 50-60 years and suitable to the soil
Yala City Municipality once analyzed challenges faced by the farmers and found the following:
- Farmers’ mindset that needs to change
- Technology that farmers are not familiar with
- Branding that has never been done
- The needs to learn and reskill
Pongsak added that Thailand is advantageous in terms of resources. Fruits grown in Yala may not be industrial fruits but the government still needs to invest in local studies to strengthen the local economy. Pongsak is now coming up with a Yala Dahlia project to export them to China where there is a need.
He is also considering another project: to lease the city’s government land for the local farmers. The land could be used to grow profitable plants such as kratom, with supervision from the municipal officers. Dr. Srilaporn added that land use and land ownership are two separate issues. Renting a piece of land still yields produce while some only discuss land ownership issues which are challenging to solve. Some landowners do not put a high price on rent since they also gain benefits from people renting the land that is not having to pay taxes. Land-rental benefits both sides.
To solve inequality and poverty, with technology
Ukrit told us about his agricultural start-up founded with his experience from working in Silicon Valley. He wants to integrate AI into the agricultural sector where income per household is merely 5,000 baht per month. His application is currently used by 500,000 people, a small number compared to Thailand’s fifteen million farmers. He talked about a factory in Thailand that sells their pineapple juice to Mark and Spencer, reflecting the fact that Thailand is abundant. He agreed with Dr Srilaporn, Thai farmers have yet to see themselves as entrepreneurs that know how to invest and know their markets. Thai farmers still think only of their produce, not who to sell to or how. This challenge needs integration due to the diversity of farmers, there is a one-size-fits-all policy and we need to segment between field crops, garden plants, older generation farmers and younger ones or else the government will still have to subsidize farmers.
For now, the solution is to lower the production of less profitable crops and turn to premium ones. This is the time for the new generations to integrate technology into farming and create diversity like what the Japanese government has done.
Apart from the Covid-19 pandemic, Ukrit is concerned about climate change and ageing society. Farmers depend around 80% on rainwater, there is no efficient irrigation system. No rain quickly translates into no profit and the government’s problems. These challenges need to be tackled, we need to use technology to substitute human labour in the ageing society. If the local economy falls, the entire country will be affected.
Reskilling farmers to boost Thai economy
Thai farmers invest a lot with low returns, especially rice. Thailand produces a large quantity of rice for the world but we do not have the power to regulate the price, resulting in high risk. Why do we still have so few varieties of rice? Can we create new varieties? Can we set rice standards like what we do with coffee beans? Which direction are we going to take? These are urgent questions.
Dr. Srilaporn brought up her experience when assisting farmers to keep records of their ledgers. At the end of the month, the whole village gathered and compared their fertilizer cost to other villages, theirs is eleven million baht more expensive. They were curious and started to reduce the cost. A farmer in Nakhon Pathom was in two-million baht debt and kept a record in a ledger, changing from chemical fertilizer at 30,000 baht a month to organic fertilizer at 5,000 baht a month.
The pain point for Thai farmers is the fact that they cannot control cost, most of them do not keep a record of that. They lack entrepreneurial skills, a much-needed ability. Keeping a ledger helps reduce unnecessary costs. Farmers are in debt because they are not informed of the selling prices and Thailand never sets the rice price for the global market and this entirely affects the farmers. Dr Srilaporn categorized solutions according to farmer types:
- The low skilled with little resources. This segment needs skills to keep ledgers and they need to gather together to negotiate and set product standards with simple methods.
- The high skilled with little resources. This segment needs to gather together to have access to resources and they need marketing skills. Like in Japan where farmers know who to sell to and at what price so that they are able to plan their farming.
- The high-skilled with resources. This segment needs to learn more about technology, they need to set product standards, find buyers via platforms and logistics.
Dr. Silaporn mentioned that universities may be the best actors in educating farmers, they have the knowledge and they are impartial. They can invite experts to help especially on digital infrastructure and digital literacy which are essential skills for Thai farmers.
Ukrit emphasized that every farmer wants to have a better life just like all of us. He once met a farmer who learned about new agricultural technology via youtube videos. The farmers usually observe other farmers who use new technology. We could, he said, find influential farmers and work with them. We need to move fast because we are not simply competing locally but internationally. In a world where everyone is ready to try new products, if we cannot adjust, we will not survive.
One of Ukrit’s concerns is rules and regulations. When a layperson wants to open a restaurant, they have to file for licenses from at least 4-5 agencies, resulting in people doing businesses illegally. This creates hurdles for SMEs to grow. Take another sample about rosewood. A farmer who wants to export rosewood has to contact different agencies for various issues just to export it. The red tape is a hindrance to new businesses and theories.
To strengthen the local economy, change the mindset
Support from the government is another concern. Pongsak told us that the challenges exist at the structural level. 70-80% of the Yala population are farmers but there is not a single agriculture academic in the municipality. Regional policies are more geared towards the central government, sometimes they tell people to raise cows despite the fact that the land is not suitable for that. This power relation needs change.
Pongsak’s new project is to do experiment farming with the local farmers and to buy longkong at prices higher than the market. At some point, the longkong price fell to just two baht per kilogram so the local government invited farmers to join the project and buy their premium longkong at sixty baht per kilogram.
When the longkong season ended, the city government found out that there were only 20% of premium longkong from all produce but the incomes were still higher than selling the fruits at 2-5 baht per kilogram. Pongsak proposed the “work less but gain more” theory just like how the Japanese farmers grow their melons and pay attention to every fruit. The world has changed, the approach has to follow suit.
What the farmers fear most is not having any produce left to sell. This happens when a fruit’s flower grows but heavy rain falls. Climate change is out of our control so the farmers need to understand environmental challenges to tackle the problems and not just depending on nature.
Ukrit said goodbye with hope. Even though the Thai local economy is in crisis, there are still opportunities out there. Exports are doing well. Now is the chance for the younger generations to go back home and change the old approach into something new and more effective. Now is the chance for the government to integrate technology into farming, to support the local economy and to go forwards.
Policies that can elevate the Thai agricultural sector may not be something so prodigious, it is simply to take a step back to support farmers, the backbone of agriculture. Every farmer needs policies that can help reskill and upskill them, the policies that fit individual needs such as financial management, entrepreneurship, technological know-how. These skill-building policies could help Thai farmers gain more incomes, get out of the wicked loop of inequality, and take the Thai agricultural sector towards the road of sustainability.
- The government needs to invest in local studies to strengthen the local economy.
- Thai farmers have yet to see themselves as entrepreneurs that know how to invest and know their markets. Thai farmers still think only of their produce, not who to sell to or how. This challenge needs integration due to the diversity of farmers, there is a one-size-fits-all policy.
- The pain point for Thai farmers is the fact that they cannot control cost, most of them do not keep a record of that. They lack entrepreneurial skills, a much-needed ability. There should be policies to build farmers’ entrepreneurial and technology skills.
- One of the concerns is rules and regulations. When a layperson wants to open a restaurant, they have to file for licenses from at least 4-5 agencies, resulting in people doing businesses illegally. This creates hurdles for SMEs and farmers to grow.
- Regional and local policies are geared towards the central government and this unequal power relation needs to change.